via Zim dollar mentality lingers – DailyNews Live 12 March 2015
HARARE – Zimbabwean products are expensive as “companies have failed to leave the Zimbabwe dollar mentality” of charging high prices, central bank governor John Mangudya said.
He said the scenario has made local products uncompetitive in offshore markets.
“There is need to adapt to the new realities of the United States dollar we are using if we are to be competitive.
Our companies have failed to leave the Zimbabwe dollar mentality behind as evidenced by high prices on products,” he said at an offshore investment conference on Wednesday.
Zimbabwe ditched its currency — ravaged by hyperinflation — in 2009 to adopt a basket of foreign currencies, dominated by the greenback.
Mangudya said local industry must change its mind-set if it is to make an impact on international markets.
“We can’t go into foreign markets because our products are expensive,” he said.
Economic experts say prices of goods and services in Zimbabwe are approximately four times more expensive than those in the region and about five times those in Europe and America.
Mangudya noted that there was need to bring foreign direct investment into the country to help revive the economy by resuscitating ailing companies that have failed to shake off a hangover of the decade-long economic crisis.
Apart from a biting liquidity crisis, Zimbabwe’s manufacturing sector has also been hit by erratic power supplies and as such, has to invest in alternative energy thereby increasing costs of production.
This has ultimately made local products uncompetitive in the region.
Shortage of long-term financing has also made retooling a tall order leaving companies stuck with antiquated equipment — creating production inefficiencies, which again lead to higher production costs.
As a result of the steep production costs and deteriorating economic conditions, hundreds of firms have closed shop in the last few years.
In his 2015 National Budget, Finance minister Patrick Chinamasa indicated that more than 4 610 companies had shut shop between 2011 and 2014 rendering more than 55 400 people jobless.
COMMENTS
Mr Governor,
The reason businesses are still in Zim dollar mind frame, is because the government is still in Zim dollar mind frame. The government continues to find ways to tax companies to the ground, when they should be reducing taxes to spur economic growth. The multiple taxes and levies on fuel doesnt help either. How can our goods not be more expensive when we pay 35% more in fuel than our neighbours South Africa? You force us to use this blended nonsense, promising that our fuel prices are going to go down,but dispite the mandatory blending, despite the drop in international oil prices, we still have the highest fuel costs in Southern Africa?? It is governments responsibility to create an environment where businesses can grow and be competitive, but instead, you increase taxes, you send your hound dogs (ZIMRA) to harass and close businesses…. While you continue to give the government money to buy expensive vehicles and live lavish lifestyles. It is unbelievable…. A bunch of morons… You have repressive labour laws that makes it impossible for companies to downsize and reduce their wage bills… Meanwhile, you keep a bloated civil service, that does not service the public. You have one civil servant for every 20 people in Zimbabwe (man, woman and child)and they goble up more than 80% of our annual budget… In south Africa, they have 1 for every 60 and in more developed countries like Japan, you have 1 for every 120… How do you expect businesses to be competitive, when the government itself is not competitive? You cant even finish the Tokwe dam project because of your ineptitude… You cant even solve the water crisis in Harare because your city fathers choose to buy luxury 4x4s before the project even commences (and then you justify this by calling them “Start up costs”..) Lets not talk about the lack of power. Companies in the light and Heavy industrial sites in Harare are going for up to 5 hours a day without power.. Obviously they need alternative power.. So they run industrial generators that obviously increase their overheads!!! What a shame….
Clueless people. Tired
Sir, with all due respect, bring back the $Z and trade internationally being you-who you are with your goods. This idea of wishing you were Puerto Rico or some Hawaiian Island please…. How can you expect to trade like a developed country using their money, expecting to win when you are even importing what you are selling from the very country whose currency you are using? Ever wondered why all – and I mean all sovereign countries use their currency? How come you do not seem to know the answer to that while you claim to be the RBZ boss? Wake up!